Selling your business is a big step, no matter how big or small the enterprise. It’s also an emotional time, as you’ve probably spent many months and years building it up, connecting with customers and solving problems.
But selling a business is never easy, even if you’re relieved to be getting out. In an evolving market, and with more uncertainty than ever, you could be facing an upward battle. Here we’ll take a look at 10 things you should consider before calling it quits.
1. Your post-sale plan
If you’ve decided to sell, you must know what’s in store for you afterwards. While it’s nice to get a boost in cash flow from the sale – it’s important to consider what your financial plans are further down the track. Drawing up a post-sale financial plan will help you manage your financial life once you’ve sold.
2. Understand what you’re giving up
There’s always an opportunity cost associated with selling your business. If you’re in business, you probably already know what that term means – it’s the value of what you’re forgoing if you sell. Chances are you’ve already thought long and hard about this and have decided to sell. Sometimes that decision can be made purely from an emotional or financial perspective. It’s good to pay attention to both sides of the story and understand all aspects of what you will forget by selling your business.
3. Determine a fair market price
This can be tricky – especially for founders who have poured their life’s work into a project that they believe in. That tends to put many would-be sellers at risk of overestimating their company’s worth. This is why it’s important to get market experts involved who can help you accurately determine a fair market price for your business. Heading into negotiations with this balanced approach can work to your advantage when it comes to the final sale.
4. Pump value before going to market
To land the best deal possible, you’ve got to convince buyers that what they’re getting is filled to the brim with value. Improving the efficiency of operations and galvanising the mission of your business before going to market puts your position as a seller in better stead than if you just went onto the market unprepared. The trick is to make such improvements sustainable so the new owner isn’t left with a scuttled ship.
5. Timing is everything
It’s no secret that timing is important when it comes to selling a business. Market trends, as well as the overall business cycle, will play a big role in determining when the time is ‘right’ for selling. This requires patience, diligence and resolve on your part. Once you’ve decided to sell, it’s best to determine immediately what position you’re in and where the market is at and make some informed decisions on when is the right time.
6. Get the legal support you need
It can’t be overstated that receiving the right legal advice and assistance before and during negotiations is essential to the success of the sale. Before you enter into any agreements, it’s wise to hire an independent and qualified commercial lawyer to support your sale and make sure everything is legally sound. Commercial law firms are well versed in the recent procedures and will make your job easier when push comes to shove.
7. Be honest – all the way
As a business owner, it’s important that you uphold your end of the bargain – when it comes to selling your business, honesty is always the best policy. Whether that’s engaging with your customers, employees, managers, investment partners, or the buyers themselves, your reputation is on the line. Be prepared to take some flack from various corners, even at the personal level with your family. But always remember to be truthful to yourself and with others.
8. Pass on success, not chaos
Making a business selling-ready is no easy task. And while it’s tempting to present a ‘perfect picture’, it’s important that you also make sure the future owner isn’t left with chaos internally or externally. Keeping up positive and productive relationships until the handover is key to the long-term success of the project, and it’s your duty to make sure you’re ‘there’ until the end.
9. To bid or not to bid
Allowing potential buyers to bid on the price is a unique way to create demand and urgency for the sale of your enterprise. Once you get multiple buyers bidding on your business this changes the market for your sale and can work wonders in your favour.
10. Keep your employees in the loop
Employees are the lifeblood of your business or organisation. They’re the ones who make it all possible. So keeping them informed as appropriate is essential for morale and the future viability of the company. Be sure to communicate with them and be there to explain and answer any questions. The communication you have with your staff, whether it’s direct or via lower management is critical to keeping your business fully functioning and profitable during negotiations and beyond.